The Indian cement market has significant growth potential due to low per capita consumption.

Overview

India is the world’s second-largest cement producer after China, accounting for about 7% of the global output. The country is also among the leading exporters worldwide. Since cement is a cyclical commodity, the dynamics of production are highly dependent on the overall economic activity in India. Thus, the recent slow-down in GDP growth and especially the unstable situation in the construction sector have resulted in decreasing demand and excess capacities.

Demand

The housing sector is the main driver of demand for cement manufacturing, as over 67% of the production is directed to housing construction. Another 13% are used in the commercial construction and 11% in infrastructure projects, with approximately 9% of the cement used in industrial construction.
India’s cement production fully meets domestic demand. The per capita consumption in the country is substantially below the world average and far lower than the consumption in India’s main competitor – China, suggesting good potential for expansion.

Forecast

In the medium term, economic growth, rising population and high interdependence between GDP growth and infrastructure development suggest stable expansion of the cement demand. Moreover, forecasts point to reduction in the inflationary pressure which will increase households’ disposable income.